Investment in stocks of mainly manufacturing
concerns may in some cases lead to profitability

By SHAHID HAMEEDOct 22 - 28, 2001

Where to invest your money? A million dollar
question indeed, particularly in the wake of the prevailing scenario.
The 'question in question' also has a number of conflicting
connotations that need to be addressed before anybody even tries to
answer it. Candid answers to the following questions need to be
acquired before attempting the impossible.

Answers to all the above questions need a couple of
Ph.D. theses, which is certainly not the intention. In order to jump
to some kind of a conclusion, we may have to limit our current
exercise to those honest, hard working, middle or upper middle class
salaried employees who are finding it difficult to invest their hard
earned meager money that they have some how saved or received after
their pension or had opted for or were forced to opt for the golden
handshake scheme in avenues which are permissible under Sharia.

The people that are under discussion, in the strict
term, are a rare commodity these days. Such people are rarely found in
places of authority, but exceptions cannot be ruled out. These species
are generally found in oddest of places particularly in departments
unrelated to core activity. Their only weak point is their prime
concern for the right and wrong of things, an unpardonable offence in
our present day society. The irony is that most of the 'so called'
successful people in our present day society are no doubt intelligent,
hard working and highly educated lot but are naive enough to be
totally ignorant of the reality of life after death, ultimate
accountability and "Jaza o Saza". These days, we seem to be
more concerned in investing in our 'present' rather than our 'future'
or hereafter. In fact, we need to be more concerned about our 'future'
than our 'present'. Because of our moral degradation, which seems to
have crossed all permissible limits, we the Pakistanis in particular
and Muslims in general have become a decadent society. We need to
change our perception altogether to re-kindle our lost glory after
which we would not be bothered with such questions. We should, in
fact, invest in our 'future' that has the key to our success both in
this world and hereafter. Investment in our 'present' cannot even be
ruled out. Let us invest in our children's education, our home, our
environment, our livelihood, etc.

The silent minority that we are talking about has
little or nothing to save because of their honest disposition.
Whatever little amount is available either from one's pension or
belonging to the oft repeated cliche 'the golden handshakers' one
would find it most difficult to opt for an investment opportunity that
is safe, profitable and above all, Sharia compatible. Following are a
number of such avenues which are either Sharia compatible or quasi
compatible:

Musharika / Modaraba Certificates: Despite the
fact that both Musharika and Modaraba Certificates are both Sharia
compatible but the way these are being administered in Pakistan or
elsewhere, under the prevailing financial system, are far from being
Sharia compatible. The success of this 'so called' Islamic mode of
investment certificates is evident from the fact that a number of
people wish to invest their savings in investment avenues that are
free from interest. The only question is the Sharia compatibility of
the 'liability side' of the whole issue unless, of course, the funds
of these institutions are invested in a Musharika, Modaraba, Ijara or
other Islamic modes of financing, in the real sense of the term. A
careful analysis of the operations of an Islamic financial institution
needs to be looked into prior to making investment in similar
investment certificates.

Modaraba Company: Investment in a Modaraba
company, preferably involved in manufacturing, needs to be thoroughly
looked into particularly in respect of the credibility and expertise
of the Mudarib together with its business plans. The concept also
needs to be studied in great detail as it holds great promise
particularly for 'golden handshakers' who may find their funds
channeled in both profitable and Sharia compatible investment avenues.
The move can also stimulate the much-needed impetus for industrial
growth.

Investment in Stocks: Investment in stocks of
mainly manufacturing concerns may in some cases lead to profitability
and Sharia compatibility subject to physical stock transaction,
expertise, access to requisite information, etc. However, due to a
general lack of direct relationship between the stocks and their
fundamentals, the captioned avenue may not be a viable investment
proposition for an ordinary person belonging to the given category of
individuals.

Other forms of Investment: Other most common
forms of present day investments like real estate, currencies, savings
schemes, gold, bonds, etc. are not Sharia compatible, mainly due to
the element of fixed return in some cases and lack of circulation of
money in the other.

The panacea for all our socio-economic ills lies in
the adoption of the Islamic Economic System ensuring socio-economic
justice for all. Given the prevailing circumstances, the road leading
to the cherished goal of every Islamic country of establishing the
'Islamic Economic Order', seems a far cry. An honest beginning can be
made by at least improving "Good Governance" in various
organizations by way of selecting credible and competent people at the
helm of affairs and enforcing accountability at all levels. Such
people are in a minority but may not be too difficult to find.

With improved 'Governance' and enforcement of
accountability, hopefully in not too distant a future, the 'question
in question ' may not be too difficult to answer.